Tips for paying off your student loans
|Updated: 02:15 30-07-2016|
The South African Revenue Services (SARS) recently announced that it is now legal for its officials to hand over certain information of taxpayers to the National Student Financial Aid Scheme (NSFAS), to ensure that former students who are now taxpayers cannot dodge their loan repayments.
According to NSFAS, at the end of March 2015 the scheme recorded a loan book with a cumulative value of R21.6 billion, and a fair value of R6.1 billion.
Motshabi Nomvethe, Technical Marketing Specialist at PPS, said that it is no surprise that graduates face financial challenges when it comes to paying back their student loans.
“There can be many reasons for this, but the most common reasons usually include the high cost of education, the general increase in the cost of living and poor management of personal finances due to the lack of financial education. It is important that graduates who do take student loans out are aware of the costs involved and make sure they are informed about how to structure a repayment plan.”
According to Nomvethe, loan repayments play a huge part in sustaining the future of schemes such as NSFAS which provide financial aid for thousands of other young people who wish to obtain a tertiary education.
“People need to keep in mind that when they do not repay their student loans they are withholding the opportunity of tertiary education from someone else in dire need of financial aid.”
She provides the below tips for graduates who are currently paying off their student loans:
• Begin by drawing up a budget as soon as you graduate and start earning a salary to incorporate loan repayments into your monthly expenses.
• Aim to pay off the loan as soon as possible.
• Understand how the loan is structured and keep track of the loan by knowing the balance, the interest charges and repayment status at all times.
• Do not be tempted to spend money on luxury, trendy items before paying the loan debt.
• If you haven’t found employment, contact your creditors and inform them of your current situation, so that alternative repayment arrangements can be made.
• Don’t incur more debt during this period, and advisably even after the student loan is paid off.
• Stay in touch with the lender by informing them of any change of address or contact details, as some lenders do penalise borrowers if they fail to keep them informed of their current situation.
• Keep the end and mind and stay focused. The sooner you pay off the debt, the sooner you can be financially free and plan for the life that you want to live.
• When in doubt, seek the advice of a reputable financial adviser who will assist you with the entire process.
|Source: PPS Financial Planning||Published: 09:02 25-07-2016|